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HomeMy WebLinkAbout7. Preliminary Approval for Issuance of a Conduit Revenue Note for the Benefit of St. Gertrude's Health Center-Res. No. 7033CITY OF SHAKOPEE Memorandum ~ MEMO T0: Mayor and City Council Mark McNeill, City Administrator FROM: Julie Eddington, City Attorney RE: Providing Preliminary Approval for. Issuance of a Conduit Revenue Note for Benefit of St. Gertrude's Health Center DATE: August 11, 2010 INTRODUCTION AND BACKGROUND: St. Gertrude's Health Center has requested that the City issue atax-exempt conduit revenue note in the maximum amount of $6,500,000 on its behalf in order to provide financing for the costs of the acquisition, construction, and equipping of an approximately 40,500 square foot three-level building expansion with 30 new licensed skilled nursing facility beds, expanded therapy space, a large educational area, a staff lounge, laundry, housekeeping, and central supply areas and storage space, and private patient rooms at the Borrower's Health and Rehabilitation Center located at 1850 Sarazin Street. Prior to the issuance of atax-exempt obligation, the City Council must hold a public hearing. The resolution to be considered by the City Council provides preliminary approval for_the issuance of the bonds and calls a public hearing for September 21, 2010. VISIONING RELATIONSHIP This action supports: Goal D. Maintain, improve and create strong partnerships with other public and private sector entities. RECOMMENDED ACTION: Offer Resolution No. 7033, Resolution Giving Preliminary Approval to the Proposed Issuance of a Revenue Note Under Minnesota Statutes, Sections 469.152 through 469.1651, as amended; Authorizing the Publication of a Notice of Public Hearing; and Establishing the Date for a Public Hearing Regarding the Issuance of a Revenue Note, and move its adoption. CITY OF SHAKOPEE, MINNESOTA RESOLUTION N0.7033 follows: RESOLUTION GIVING PRELIlVIINARY APPROVAL TO THE PROPOSED ISSUANCE OF A REVENUE NOTE UNDER MINNESOTA STATUTES, SECTIONS 469.152 THROUGH 469,1651, AS AMENDED; AUTHORI7~ING THE PUBLICATION OF A NOTICE OF PUBLIC HEARING; AND ESTABLISHING THE DATE FOR A PUBLIC HEARING REGARDING THE ISSUANCE OF A REVENUE NOTE BE IT RESOLVED by the City Council of the City of Shakopee, Minnesota (the "City"), as Section 1. Recitals. 1.01. Statutory Authorization. Minnesota Statutes, Sections 469.152 through 469.1651, as amended (the "Act"), authorizes a city to issue revenue obligations to finance, in whole or in part, the cost of the acquisition, construction, reconstruction, improvement, .betterment, or extension of a "project," defined in the Act, in part, as any properties, real or personal, used or useful in connection with a revenue producing enterprise, whether or not operated for profit, engaged in providing health care services, including hospitals, nursing homes, and related medical facilities. 1.02. Series 2010 Note. St. Gertrude's Health Center, a Minnesota nonprofit corporation (the "Borrower"), has proposed that the City issue its Loan Participation Revenue Note (St. Gertrude's Health Center Project), Series 2010 (the "Series 2010 Note"), in a principal amount not to exceed $6,500,000. 1.03. Project. The Borrower has proposed that the proceeds of the Series 2010 Note to be issued by the City will be applied to (i) finance the costs of the acquisition, construction, and equipping of an approximately 40,500 square foot three-level building expansion with 30 new licensed skilled nursing facility beds, expanded therapy space, a large educational area, a staff lounge, laundry, housekeeping, and central supply areas and storage space, and private patient rooms at the Borrower's Health and Rehabilitation Center located at 1850 Sarazin Street in the City (the "Project"); (ii) fund one or more reserve funds; and (iii) pay the costs of issuance of the Series 2010 Note and other costs related to the Project. 1.04. Public Hearing Required. Section 147(f) of the Internal Revenue Code of 1986, as amended, and regulations promulgated thereunder, requires that prior to the issuance of the Series 2010 Note, the City Council of the City (the "City Council") approve the Series 2010 Note after conducting a public hearing thereon. Section 469.154, subdivision 4, of the Act requires that prior to submitting an application to the Minnesota Department of Employment and Economic Development ("DEED") for approval of the Project, the City Council must conduct a public hearing on the proposal to undertake projects authorized to be financed under the terms of the Act. Section 2. City Council Approvals. 2.01. Preliminary Approval. The Project is hereby given preliminary approval by the City. The issuance of the Series 2010 Note in the original aggregate principal amount of approximately $6,500,000 to finance the Project is hereby approved subject to the City Council holding a public hearing on the Project and the issuance of the Series 2010 Note and the approval of the Project by DEED as required by the Act. The issuance of the Series 2010 Note is also subject to the mutual agreement of the City, the Borrower, and the initial purchaser of the Series 2010 Note as to the details of the Series 2010 Note and provisions for its payment. In all events, it is understood, however, that the Series 2010 Note shall not constitute a charge, lien, or encumbrance, legal or equitable, upon any property of the City except the City's interest in the loan or revenue agreement with respect to the Series 2010 Note and the Project, and the Series 2010 Note, when, as, and if issued, shall recite in substance that the Series 2010 Note, including interest thereon, are payable solely from the revenues received from the Project and property pledged to the payment thereof, and shall not constitute a general or moral obligation of the City. 2.02. Approval of the Project. It is hereby found and determined that the Project furthers the purposes set forth in the Act, and the Project constitutes a "project" within the meaning of Section 469.153, subdivision 2(d), of the Act. 2.03. Submission of Project to DEED. In accordance with Section 469.154 of the Act, the City Administrator of the City is hereby authorized and directed to submit the proposal for the Project to DEED. The City Administrator and other officers, employees and agents of the City are hereby authorized to provide DEED with any preliminary information needed for this purpose, and the City Administrator is authorized to initiate and assist in the preparation of such documents as may be appropriate to the Project, if it is approved. 2.04. Approval of Bond Counsel. The law firm of Kennedy & Graven, Chartered, is authorized to act as Bond Counsel and to assist in the preparation and review of necessary documents relating to the Project and the Series 2010 Note issued in connection therewith. The Mayor, City Administrator, and other officers, employees, and agents of the City are hereby authorized to assist Bond Counsel in the preparation of such documents. Section 3. Public Hearin. 3.01. Establishment of Public Hearin. The City Council shall meet at or after 7:00 p.m. on Tuesday, September 21, 2010, to conduct a public hearing on the issuance of the Series 2010 Note as requested by the Borrower. 3.02. Notice of Public Hearing. The City Clerk is authorized and directed to publish notice of the hearing in substantially the form attached hereto as EXIiIBTT A in the- Shakopee Valley News, the official newspaper and a newspaper of general circulation in the City, once, at least fourteen (14) days prior to the date of the public hearing. Section 4. Reimbursement of Costs under the Code. 4.01. Treasury Regulations. The United States Department of the Treasury has promulgated final regulations governing the use of the proceeds of tax-exempt bonds, all or a portion of which are to be used to reimburse the City or a borrower from the City for project expenditures paid prior to the date of issuance of such bonds. Those regulations (Treasury Regulations, Section 1.150-2) (the "Regulations") require that the City adopt a statement of official intent to reimburse an original expenditure not later than sixty (60) days after payment of the original expenditure. The Regulations also generally require that the bonds be issued and the reimbursement allocation made from the proceeds of the bonds occur within eighteen months after the later of: (i) the date the expenditure is paid; or (ii) the date the project is placed in service or abandoned, but in no event more than three years after the date the expenditure is paid. The Regulations generally permit reimbursement of capital expenditures and costs of issuance of the bonds. 2 4.02. Reimbursement for Expenditures. To the extent any portion of the proceeds of the Series 2010 Note will be applied to expenditures with respect to the Project, the City reasonably expects to reimburse the Borrower for the expenditures made for costs of the Project from the proceeds of the Series 2010 Note after the date of payment of all or a portion of such expenditures. A11 reimbursed expenditures shall be capital expenditures, costs of issuance of the Series 2010 Note, or other expenditures eligible for reimbursement under Section 1.150-2(d)(3) of the Regulations and also qualifying expenditures under the Act. Section 5. City's Costs. Issuance of the Series 2010 Note is contingent on the Borrower submitting an Application for Tax-Exempt Financing to the City and payment of all of the City's fees and expenses related to the issuance of the Series 2010 Note. Section 6. Effective Date. This Resolution shall be in full force and effect from and after its passage. Approved by the City Council of the City of Shakopee, Minnesota, this 17th day of August, 2010. CITY OF SHAKOPEE, MINNESOTA Mayor Attest: City Clerk 3 EXHIBIT A NOTICE OF PUBLIC HEARING CTTY OF SHAKOPEE, MINNESOTA NOTICE OF PUBLIC HEARING DESCRIBED IN MINNESOTA 469.1651, AS AMENDED WITH RESPECT TO A PROJECT STATUTES, SECTIONS 469.152- NOTICE IS HEREBY GIVEN that the City Council of the City of Shakopee, Minnesota (the "City") will hold a public hearing on Tuesday, September 21, 2010, at or after 7:00 p.m., at City Hall, 129 Holmes Street South, in the City, to consider a proposal for the issuance of revenue obligations of the City under Minnesota Statutes, Sections 469.152-469.1651, as amended (the "Act"), on behalf of St. Gertrude's Health Center, a Minnesota nonprofit corporation (the "Borrower"). The proceeds of the revenue obligations proposed to be issued by the City for the benefit of the Borrower (the "Series 2010 Note") will be applied to (i) finance the costs of the acquisition, construction, and equipping of an approximately 40,500 square foot expansion to the Borrower's Health and Rehabilitation Center located at 1850 Sarazin Street in the City (the "Project"); (ii) fund one or more reserve funds; and (iii) pay the costs of issuance of the Series 2010 Note and other costs related to the Project. The Project will be owned and operated by the Borrower. Following the public hearing, the City Council will consider adoption of a resolution approving the Project and giving approval to the issuance of the Series 2010 Note. The aggregate face amount of the Series 2010 Note proposed to be issued to finance the Project is presently estimated not to exceed $6,500,000 and may be issued in one or more series. The Series 2010 Note to be issued by the City will constitute a limited obligation. of the City payable solely from the revenues expressly pledged to the payment thereof, and will not be a general or moral obligation of the City and will not be secured by the taxing power of the City or any assets or property of the City except any interests of the City in the Project that maybe granted to the City in conjunction with this financing. All interested persons may appear and be heard at the time and place set forth above. A draft copy of the proposed application to the Department of Employment and Economic Development for approval of the Project, together with all attachments and exhibits, shall be available for public inspection following the publication of this notice, at City Hall during normal business hours. Dated: [Date of Publication] SH155-233 (JAE) 373105v2 CITY OF SHAKOPEE, MINNESOTA A-1